Nearly one in four (24 per cent) people don’t know how much they and their employer are paying into their pension, research from Hargreaves Lansdown has found.

The research showed that basic rate taxpayers (24 per cent) are “significantly” more likely to have no idea how much money is being paid into their pension.

This compared to 12 per cent of the higher rate and 2 per cent of top rate taxpayers.

The research showed that in terms of contributions per month, 17 per cent said they were most likely to contribute somewhere between £101-200 per month.

Meanwhile, 57 per cent of basic rate taxpayers contributed between £1-£300 each month and 30 per cent of additional rate taxpayers have between £1,501-£2,000 or more entering their pension each month.

Hargreaves Lansdown head of workplace saving analysis, Clare Stinton, highlighted the impact of auto-enrolment, which she said has “has got millions more people saving for retirement”, but many are doing so “blindly”.

Stinton noted that as one in four don’t know how much they and their employer are paying into their pension, how can they know what they will get out and “crucially” whether this will be enough for them to retire on the saver’s own terms.

She also suggested that basic rate taxpayers are far more likely to be in the dark than higher earners, yet one in 10 of those in the 40 per cent tax bracket don’t know what they’re contributing.

Stinton warned that this lack of awareness could be costly for high earners who need to actively claim any extra tax relief from HMRC on pension contributions.

“Failing to do so could mean leaving thousands of pounds on the table unclaimed,” she added.

Additionally, Stinton noted that with fiscal drag pushing more people into higher tax bands pensions are an “increasingly powerful” way to reduce your total taxable income and keep more earnings.

“It's no surprise then, that both awareness and contribution levels rise with income,” she said.

“The tax perks of pensions typically get more generous as you climb the income ladder, with tax relief available at your highest marginal rate.”

Stinton also stressed the importance of employer contributions, stating: “If you don’t know what’s going in, then chances are you don’t know what’s on offer either”.

“Over half of basic rate taxpayers are contributing less than £300 a month, and for many the rising cost of living may mean that there is little room to stretch further,” she added.

She noted the value of checking if employers offer salary sacrifice, as this will mean the individual will save both the income tax and national insurance on what they pay.

For instance, Stinton said that for basic rate taxpayers this is a 28 per cent tax saving, meaning every £100 into an individual’s pension could cost them as little as £72.

In addition to this, she highlighted the employer match as a system that could “really increase” the amount going into a pension. 

Stinton argued that the “crucial” question savers need to ask themselves is if they are paying enough into their pension to live the life they want later on.

“There’s no one-size-fits-all answer, but the earlier you run the numbers, the greater chance you have to adjust your course,” she added.

“If you can afford to pay in a little more, every pound you pay in now could be the difference between scraping by in retirement or enjoying weekends away and dinners out.”

She emphasised the positive of tools, stating that the pension calculator will do the “heavy lifting”.

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